How big is too big? It is a question finally being asked at Google, the fastest-growing company in history, after its co-founder admitted that after launching so many internet services even he is confused.

Google is now much more than a web search engine: it is in talks to buy YouTube, the hugely popular video-sharing website, for £856m, according to reports yesterday. The news was a tacit acknowledgement that the Silicon Valley behemoth's own service, Google Video, has failed to compete.

So rapid is the eight-year-old company's expansion that its executives have now conceded that it risks losing focus. Sergey Brin, Google's co-founder - whose wealth is estimated at £7.5bn - has ordered engineers to stop creating so many new products and to work instead on improving its existing offerings.

Brin is leading an initiative across the company entitled 'Features, not products', after executives realised users were baffled. 'It's worse than that,' confessed Brin. 'It's that I was getting lost in the sheer volume of the products that we were releasing.'

Google is celebrated for the simplicity of its stripped-down home page and search box, but more than 50 products are in various stages of development by hundreds of engineers. Internal audits this year showed that the company had been spending too much time on new services to the detriment of its core search engine. Eric Schmidt, its chief executive, said: 'The result occurred precisely because we told these incredible engineering teams to run as fast as possible to solve new problems. But then that created this other problem.'

He added that surveys showed that Google users could recall around half a dozen products, but 'they cannot remember 35'. Google has cancelled several services in development and instructed their creators to integrate them with existing products. 'That is a big change in the way we run the company,' Schmidt said, describing Google's previous attitude as 'just get this stuff built and get it out - don't worry about the integration'.

Analysts say the Google empire is in danger of overreaching itself. Silicon Valley analyst Rob Enderle told the Los Angeles Times: 'They created a bunch of crap that they have no idea what to do with. What a huge waste of resources.'

The acquisition of YouTube, which in 18 months has grown into a new media darling with users viewing video clips more than 70m times a day, would be a logical addition to the bulging portfolio. YouTube commanded 46 per cent of visits to US online video sites in September, compared with a 21 per cent share for the video activities of MySpace - a social networking site bought last year by Rupert Murdoch's News Corp - and 11 per cent for Google Video, according to the market-research firm Hitwise. But Google may face competition for the buy-out from News Corp, Yahoo, Microsoft, AOL Time Warner and Disney.

Rumours of the deal began when an email from a 'very good' industry source arrived in the inbox of the internet blog TechCrunch. The Wall Street Journal quoted sources saying that talks were under way but at a sensitive stage. Mark Kingdon, chief executive of Organic, a San Francisco online-ad agency, said: 'Combining Google's huge advertiser base and proven key-word approach with YouTube's huge inventory of tagged content and their engaged audience could be a very lucrative combination if they can pull it off.'